Seat allocation: Designated airlines of both countries will immediately be able to offer up to 10,500 seats per week between Australia's major gateway airports and China, and a further 4,000 seats from Nov-2010. Previously, seat allocations were capped at 8,500;

Special capacity entitlements: A special capacity entitlement to accommodate new services between China and Brisbane, with 2,000 of the additional seats for Chinese airlines quarantined for services to/from Brisbane;

Airline cooperation: Further opportunities for Australian airlines to operate between China and other destinations such as Europe, while allowing Chinese carriers to operate to additional points beyond Australia. The also exits opportunities for the airlines to operate via a larger number of intermediate points;

Open skies agreement: The agreement contains a shared commitment to commence negotiations aimed at concluding an 'open skies' agreement.

Close to 1.4 million people travelled between Australia and China in 2009, with growth on routes between the countries averaging 16.9% over the past five years. [more]

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Cebu Pacific Air is again looking at expanding in the Australia market by launching flights to Melbourne. Efforts in recent months to improve Cebu Pacific’s performance in Sydney, which was launched in 2014, are bearing fruit and the airline is confident with Melbourne it can stimulate further demand in the Philippines-Australia market.

The LCC initially added Melbourne to its network plan in 2015 after the Philippines and Australia forged an extended air services agreement. But Cebu Pacific subsequently decided to shelve plans to launch Melbourne, and has instead been using additional A330 capacity to expand in its domestic and regional international market.

Melbourne is now back on the agenda and is the next priority – leapfrogging Honolulu – for Cebu Pacific’s long haul operation. A new partnership with Melbourne-based Tigerair Australia is a key driver in making Manila-Melbourne a viable route, along with the anticipated rapid growth in Australian visitor numbers to the Philippines.

Philippine Airlines (PAL) is planning more international growth over the next year or two with a focus on Australia, China, the US and potentially Europe. Nonstops for Brisbane and more capacity for Sydney are in the pipeline for Australia, while in the Chinese market PAL is looking to launch Chengdu.

In Europe PAL is considering adding a second European destination in 2018, with Frankfurt and Rome under consideration. PAL has already added capacity to Europe this year by upgrading its London Heathrow service to daily.

This is the second in a series of analysis reports on the Philippines market. The first report focused on PAL’s Middle East operation, which could be reduced in 2017 amid intensifying competition and weakening demand.